Outlook: The energy complex is carrying momentum into the middle of the week with crude and products all observing gains this morning. Reports that the Houthis have carried out more attacks this morning may be a signal that the Red Sea is far from under control and shippers will continue to shift their routes. The appetite for US crude has not slowed with exports above 5 mbpd last week and will be a number to keep an eye on today when the EIA stats are released. Products for the most part are ignoring the API’s forecast for significant draws in products for the second consecutive week. If the EIA confirms similar builds, the headwinds may firm up. Natural gas is sharply lower today with risk premiums of freeze-offs fading with the storm system moving through vulnerable areas. Propane saw a strong move higher yesterday and we could see that extend with crude moving higher.
Crude
- Bloomberg is reporting the Houthis launched more attacks on merchant vessels in the Red Sea this morning.
- The EIA’s STEO report released yesterday forecasts US crude production to average 13.2 mbpd in 2024 and 13.4 mbpd in 2025.
- The cost of chartering VLCC which loads 2 mb from the US to Asia has rose to $10 million from $8 million according to Reuters.
- The prompt WTI spread has traded back into backwardation for the first time since the middle of November.
- Reuters estimates crude stocks fell 0.7 million barrels last week.
- The API survey showed crude stocks rose 5.2 mb last week.
- The EIA will report inventories at 9:30 am CT.
- As of 8:05 am CST: Brent crude oil up $1.48 to $77.60, US dollar index up $0.174 to 102.383 while the nearby e-mini S&P 500 futures contract is down 29.50 to 4772.00.
Diesel
- Reuters estimates diesel stocks rose 2.4 million barrels last week.
- The API survey showed diesel stocks rose 6.9 million barrels last week.
- Group 3 and Chicago diesel basis remains discounted and may present opportunities to fill storage and hedge by selling futures in your territory.
Gasoline
- Reuters estimates gasoline stocks rose by 2.5 million barrels last week.
- The API survey showed gasoline stocks rose 4.9 million barrels last week.
Propane
- Conway is trading at .7200 while Belvieu is trading at .7400.
- Conway Swap Oct24-Mar25 strip trading ~.7450.
- OPIS estimates crude stocks fell 2.2 million barrels last week.
Natural Gas
- Overnight weather runs added 3 HDDs through the two-week forecast.
- HDDs added in the South and East can be more sensitive to prices as they increase the risk of freeze-offs.
- The EIA’s STEO report showed nat gas production expected to grow 1.5 Bcf/d in 2024 and 1.3 Bcf/d in 2025.
- Reuters estimates nat gas stocks fell between 104-111 bcf last week.
Continuous WTI Timespread:
